The slowdown in the Chinese economy has some market players worried about the outlook for the Australian resources sector, as reported by AAP (Mining boom over says, analyst). These concerns seem unwarranted, as any slowdown will be temporary, and there will still be strong demand from China over the medium to long-term due to the ongoing shift of Chinese people from rural areas to the cities where they are more productive. This fundamental economic transformation was well covered in a Treasury working paper in 2010 that I’ve previously posted on:
Also, the Bureau of Resources and Energy Economics report released yesterday on the outlook for bulk commodity exports to 2025 doesn’t give cause for any concern the resources boom will come to an end. The report (available here) notes (p. 67, emphasis added):
World demand for resources is projected to grow over the long term, underpinned by robust growth in emerging economies, including China and India…Modelling scenarios in which Australia’s export market shares decline, remain the same or grow in the long term indicates that it is likely Australia’s mineral and energy exports will continue to experience robust growth…Although increasing competition is a market risk, there will need to be substantial falls in Australia’s market shares for future growth in export volumes to stagnate or decline from current levels.